Alice Schaus, Ayushi Trivedi, Philip Lopez, Shreya Das JOHNS HOPKINS SCHOOL OF ADVANCED INTERNATIONAL STUDIES, WASHINGTON D.C. APRIL 27, 2018

Final Proposal Project Proposal for iDE’s Engagement in Water Filter Market in Vietnam

Credit: Pham Van Ky

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Table of Contents Section I. Introduction ............................................................................................................... 3

Problem context .................................................................................................................... 3

Water quality ....................................................................................................................... 3

Impact of drinking untreated groundwater ............................................................................ 3

Need for clean drinking water ............................................................................................... 4

Water filter market ................................................................................................................. 5

Rationale for iDE’s involvement ............................................................................................ 5

UNICEF product .................................................................................................................... 5

Research study background ................................................................................................. 6

Research study key findings ................................................................................................. 7

Water Quality Findings ...................................................................................................... 7

Market Findings ................................................................................................................. 7

Consumer Findings ........................................................................................................... 8

Section II. Options..................................................................................................................... 8

Assumptions ........................................................................................................................ 10

iDE’s Role ............................................................................................................................ 11

Section III: The Proposed Approach ...................................................................................... 12

Rationale ............................................................................................................................. 12

Project Goal ......................................................................................................................... 13

Project Objectives ............................................................................................................... 13

Project Geography ............................................................................................................. 14

Target Population ................................................................................................................ 14

Theory Of Change ............................................................................................................... 14

Project activities .................................................................................................................. 14

Market Assessment ......................................................................................................... 15

Marketing and promotion ................................................................................................. 15

Distribution/ supply chain development .......................................................................... 16

Product Development ...................................................................................................... 17

Monitoring and Evaluation .................................................................................................. 17

Budget ................................................................................................................................. 18

Outputs and Outcomes ....................................................................................................... 19

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Project Outcomes ................................................................................................................ 20

Risks and Mitigation Strategies........................................................................................... 20

Assumptions ....................................................................................................................... 23

Information gaps.................................................................................................................. 24

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Section I. Introduction

Problem context

Vietnam has made great strides in solving issues related to access to improved water and

sanitation.1 However, even as access to improved water rose from 50% in 1990 to 94% by

2011, only 9% of rural Vietnamese have piped water in their households.2 Many rural

households continue to utilize untreated water from dug wells, rivers, ponds, streams or

irrigation canals, as existing rural water supply and sanitation infrastructure tends to be

inappropriately designed and poorly constructed and maintained. Access to improved water

is correlated with income level, ethnicity, and location. 99% of the richest quintile have access

to an improved source of drinking water, with 63% having piped water into the household.

Meanwhile, although 75% of the lowest quintile use an improved water supply, only 3% have

piped water.3

Water quality

Vietnamese households, particularly in rural areas, use water from wells and rivers as drinking

water sources (SAIS Trip Report, 2018). Studies have shown that this water contains high

levels of pollutants and heavy metals such as manganese, arsenic and iron4. There also exist

regional differences in water quality issues across the country. While northern Vietnam has

high concentrations of calcium and magnesium (NCERWASS), arsenic levels were found to be

dangerously high in the Red River Delta and Mekong Delta regions5. In central Vietnam,

elevated fluoride levels is an area of concern, with previously reported incidents of fluorosis6.

In a study undertaken by Takanashi et al. in 20107, it was found that the concentrations of

ammonia, arsenic, iron, total coliform, E.coli and Cl. perfringens in treated water were higher

than the Vietnamese Drinking Water Hygienic Standards.

Impact of drinking untreated groundwater

● Health impact: In rural areas, the prevalence of water-borne diseases and recorded

child malnutrition rates are higher relative to neighboring countries. The underlying

cause of these health issues are related to the availability and use of safe water,

1 https://www.wsp.org/sites/wsp.org/files/publications/WSP-Vietnam-WSS-Turning-Finance-into-Service-for-the-Future.pdf 2 ibid

3 ibid

4 https://link.springer.com/article/10.1007/s11356-017-9631-z

5 https://news.stanford.edu/news/2013/august/arsenic-water-vietnam-080913.html

6http://fluoridealert.org/news/distribution-and-genesis-of-high-fluoride-groundwater-in-ninh-hoa-vietnam-implications-for-

domestic-water-supply-and-community-health/ 7 http://www.oxfordjournals.org/cdjc/wp-content/uploads/2014/10/Kumiko-Takanashi.pdf

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sanitation, and personal hygiene.8 Even today, diarrhea is one of the leading causes

of morbidity nationwide, with around 250,000 hospitalizations a year. As many as 44

percent of Vietnamese children are infected with whipworms, hookworms or

roundworms.9 Long term exposure to heavy metals such as arsenic in drinking water

is reported to increase risks of ‘cancer in the skin, lungs, bladder, and kidney’10. In

addition, excessive exposure to fluoride in drinking water can cause ‘mild dental

fluorosis to crippling skeletal fluorosis as the level and period of exposure increases11.’

In northern Vietnam, hardness of water caused by the presence of calcium and

magnesium was widely reported by households (SAIS Trip Report, 2018). While

calcium causes scaling and is regarded as an aesthetic health indicator. High levels of

magnesium are associated with the increased risk of cardiovascular diseases12. The

latest UNICEF data on diarrheal deaths reports that13:

○ 13% post-natal deaths occur due to diarrhea in Vietnam

○ 6% of children under five deaths occur due to diarrhea in Vietnam

● Quality Concerns: The depression of the earth in urban areas resulting from the

overexploitation of the underground water has led to deteriorating quality and

quantity of water. But what is more concerning is that only 64% of the population boil

their water correctly i.e. boil it for a long enough to kill pathogens. One study reported

that 60% of stored drinking water that had been boiled were re-contaminated by fecal

bacteria14.

● Socio-economic impact: Vietnam suffers approximately $63M in economic losses

annually resulting from poor drinking water.15 Drinking unclean water causes diarrhea

and dysentery that can take away from a person’s daily wages due to work days

skipped. In turn, children suffer the most as they miss days at school and also because

diarrhea can lead to death if not treated.

Need for clean drinking water

Despite Vietnam’s significant economic growth in recent years, there continues to be a gap

between urban and rural areas when it comes to access to clean water and hygienic sanitation

facilities.16 Many parts of the country – especially areas heavily populated with ethnic

8 http://documents.worldbank.org/curated/en/236791468127488746/pdf/ICR27520P0772800disclosed0120240130.pdf 9 https://www.UNICEF.org/vietnam/wes.html

10 http://www.who.int/water_sanitation_health/dwq/chemicals/arsenic.pdf

11 http://www.who.int/water_sanitation_health/publications/fluoride_drinking_water_full.pdf

12 https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3775162/

13 https://data.unicef.org/topic/child-health/diarrhoeal-disease/ 14 https://www.path.org/publications/files/CP_vietnam_hwts_mkt_br.pdf 15

http://www.wsp.org/sites/wsp.org/files/publications/529200894722_ESI_Long_Report_Vietnam.pdf 16

https://blogs.worldbank.org/eastasiapacific/how-provide-clean-water-rural-areas-example-vietnam

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minority groups, rural remote communities, and often the poorest communities – have been

left behind.17. The UNICEF report confirms a disparity between the Kinh population and ethnic

minorities with regard to access to improved water sources in Vietnam18.

Water filter market

The market for water filtration systems in the country can be divided into three segments –

media-based (sand filters), membrane-based (RO systems), and UV-based. Among these,

membrane-based water filters capture the largest market share due to their ability to

‘significantly reduce the content of total dissolved impurities in drinking water’19. The water

filters market in Vietnam is very competitive, with a multitude of global and domestic brands

such as Kangaroo, Sunhouse etc. This was also reflected in the research study conducted by

Johns Hopkins SAIS (SAIS Trip Report, 2018).

Rationale for iDE’s involvement

Ensuring clean and safe drinking water through low-cost water filters in Vietnam strongly

aligns with iDE’s mission to create livelihood opportunities for poor and rural households.20

iDE has extensive experience in designing and implementing projects in Vietnam’s WASH

sector, and has developed relevant expertise that would be useful for market creation for

low-cost water filters. iDE’s strength in community relationships and last-mile delivery can be

a strong asset to manufacturers trying to establish a new product for the rural poor. With the

recent initiative by UNICEF in providing new ceramic filter technology in the country, this is

an opportune time for iDE to support the building of this new market.

UNICEF product

In January 2018, UNICEF, in collaboration with NCERWASS, held a workshop on "PPP for

Ceramic Filter Production Pilot - Experience Sharing and Production Introduction” in Vietnam.

At the workshop, they launched an affordable ceramic water filtration system targeted

towards low-income households, particularly those in the rural areas. The product can filter

99.9 percent of the bacteria contaminants in the water. Prior to this, Vietnamese consumers

did not have access to affordable filtration systems, other than sand filters that were used in

a few households. Sand filters are now redundant in Tuyen Quang province, due to

maintenance issues and extremely simple technology (SAIS Trip Report, 2018).

17 https://www.UNICEF.org/vietnam/wes.html 18

https://mics-surveys-prod.s3.amazonaws.com/MICS5/East%20Asia%20and%20the%20Pacific/Viet%20Nam/2013-

2014/Final/Viet%20Nam%202013-14%20MICS_English.pdf 19

https://www.prnewswire.com/news-releases/vietnam-water-purifiers-market-to-witness-cagr-of-124-during-2016-2021-finds-

techsci-research-584709921.html 20 iDE mission statement: https://www.ideglobal.org/about

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Recognizing the market gap for affordable filters, UNICEF introduced a partnership model to

distribute their ceramic water filters in Vietnam. In this model, UNICEF will transfer the

technology to private manufacturers free of cost, and be engaged in marketing and

promotion of the filters for five years. Private manufacturers, on the other hand, will be

responsible for supply chain development, from production and marketing to distribution of

the product to poor households. The details of the partnership model and product are as

follows:

● An MoU has been signed between a private manufacturer and UNICEF (as of April

2018) where it is stated that UNICEF will support the private manufacturer for 5 years,

from 2017 to 2021, with a focus on quality control and product distribution. The

manufacturer can re-price the product after consultations with UNICEF and

NCERWASS

● Due to concerns about low demand for the UNICEF product, the private manufacturer

has considered re-designing of the product. The re-designed product will use the

UNICEF technology, but the exterior of the ceramic water filter will be replaced. The

use of UNICEF logo and brand on the re-designed product is to be determined.

● The manufacturer will be selling the low-cost UNICEF product for 500k VND, and

plans on pricing the re-designed filter at 1.25 million VND.

Research study background

Between October 2017 and April 2018, iDE conducted a study into the ceramic water filter

market in Vietnam. The study was performed by Graduate Consultants at the Johns Hopkins

School of Advanced International Studies in Washington D.C. and included research, case

study evaluation, and field-work components. The goals of the research was to evaluate the

current market for low-cost water filters in Vietnam. In addition, the Graduate Consultants

were to meet with various stakeholders to best understand the issues related to clean water,

water filter use, and market demands. The Graduate Consultants met with governmental

players, community leaders, citizens, private sector players, and a public private partnership

to collect key data. The research was conducted in Tuyen Quang province, located ≅ 100 km

north of Hanoi across two districts.

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Research study key findings

The fieldwork yielded key findings that offer insights for navigating the low-cost water filter

market in Vietnam. A complete field research report and research methodology report are

available for a more in-depth review of the findings.21

Water Quality Findings

● Vietnam spans several latitudes and is home to several geographies. As a result, water

quality varies greatly by region.

● Several regions are affected by heavy metals, arsenic, and calcium carbonate. These

are serious health concerns, or in the case of calcium carbonate a serious consumer

demand, which a filter must deal with.

○ As the low-cost ceramic filter is made to treat microbes and pathogens, the

South of Vietnam represents the biggest opportunity for a low-cost filter 22

Market Findings

● There is a clear market gap for low-cost water filters in Tuyen Quang Vietnam. All the

water filters shops visited only sold expensive RO machines.

21 A full fieldwork report is available in Field Research Report: Assessing the market demand for

ceramic water filters in Vietnam by Das, Lopez, Schaus, & Trivedi 2018. *Note, fieldwork took place in Tuyen Quang (Northern Vietnam). Research showed that many factors vary across provinces and regions of Vietnam. Additional studies across the country may yield important data for other region

Figure 1 Water Quality Concerns Across Vietnam (source: NCERWASS meeting)

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● The study revealed a market demand with consumers expressing a willingness to pay

for a quality low-cost filter

● Low-cost water filters are growing in the market with Unilever's Pureit and the UNICEF

filter recently entering the market.

● The water filter market suffers from the prevalence of “fake” products from both

brands that do not actually filter, and imposter products made to look like reputable

filters. This creates distrust in the market, and places importance on brand and

marketing.

● The market size is limited by the functionality and limitations of low-cost filters. There

is not a one-size fits all filter solution to address the variety of regional concerns.

Consumer Findings

● Vietnamese consumers are sophisticated and demand quality.

● Consumers understand the importance of filtering water.

● Consumers express a price-quality tradeoff, and are willing to pay more for quality—

either in function or design. When shown both the Original Tunsai and Super Tunsai,

consumers were nearly all willing to pay more for the better design.

Figure 2 Different types of ceramic filters

Section II. Options

iDE faces several options to engage in the drinking water sector in Vietnam:

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• iDE could decide to start a social enterprise based of the model of Hydrologic or iDE

Vietnam could choose to open a subsidiary of Hydrologic in Vietnam.

• iDE could partner with UNICEF and consult them on market research and supply chain

development.

• iDE could work directly with private manufacturer selling water filters and provide

them with technical support in market assessment, marketing, supply chain

development and product design.

• iDE could work together with private companies who are selling filters as CSR partner

and last-mile distribution partner. For a description of the different options refer to

Appendix 1.

After considering factors such as financial feasibility, ease of obtaining permissions, and iDE’s

expertise, the option to partner with private manufacturer was chosen. Given the low

demand and the high upfront costs of starting a business, starting a social enterprise or even

expanding Hydrologic was quickly disregarded as an option. The option of partnering with

larger private companies currently developing solutions for low-income consumers – such as

Unilever- was rejected because iDE’s added value to the project would be limited and there

would be a potential misalignment of interest.

Given iDE’s deep expertise in building markets, iDE will be able to add the most value by

partnering directly with private manufacturer and supporting them to serve low-income

customers.

However, the capacity in which iDE would provide assistance would depend on the following

factors:

• Will the manufacturers be able to sell the UNICEF product at a reasonable profit? This

assumes that there is market demand for the UNICEF product.

• If the manufacturer decides to sell other products instead or the UNICEF product, will

the manufacturer be able to sell it under the UNICEF brand or not? This will depends

on whether UNICEF permits manufacturer to use the logo.

There are two possible scenarios. The first one is that the UNICEF product sells very well –

the volume sold is sufficient to sustain the manufacturer - because of high market demand

for the product. In this case the manufacturers will most likely only sell the UNICEF product.

In the second case, the UNICEF product does not sell well, and the manufacturer chooses

to launch other products with more aspirational designs to address customer demand. In

that case, the manufacturer can either sell the product under the UNICEF brand or sell the

product under another brand.

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The most likely scenario will be that the manufacturer will sell the UNICEF product, and

other products not using the UNICEF brand on them. The decision-tree below lays out the

different possible scenarios. The next section describes each of the possibilities in further

detail.

Assumptions

The table below explains the different scenarios presented in the decision-tree above, and

the assumptions associated with each scenario.

Case A: Manufacturers decides to sell only the UNICEF product.

Assumptions

● Product-market fit: The design, functionality and price of the filter satisfy

market demand, and hence there is a demand for the filter.

● Profitable business: The price at which the filter is sold leaves a high enough

margin for the manufacturer to sell the product.

Case B: Manufacturers decide to sell different products using the UNICEF logo.

Assumptions

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● UNICEF permits the manufacturer to use its logo on the re-designed products:

Since the manufacturer is planning to use UNICEF’s technology on its other

products (referred to as ‘re-designed products’ hereafter), UNICEF could be

willing to grant permission to the manufacturer to use its logo on the product for

marketing and branding purposes. This could be either conditional or

unconditional, but for the purpose of this proposal, we assume that this

permission is unconditional.

Case C: Manufacturers decide to sell different products not using the UNICEF logo

Assumptions

● UNICEF does not permit the manufacturer to use its logo on the re-designed

products: Even though the design and technology used in the re-designed

products are quite similar, UNICEF may not approve of the product or may not

be able to grant permission to the manufacturer to use its logo on it, as there is

no significant improvement in value proposition for the re-designed product to

justify the relatively higher cost.

● Even though UNICEF does not allow the manufacturer to use its logo on the

different products, it allows it to use its technology. The technology in this case

is the ceramic water filter.

● The manufacturer has the relevant licenses and approvals to sell the re-

designed products: UNICEF had to undergo certification processes to get

approval by state authorities before it could launch its filtration technology into

the market. Thus, it is assumed that since the manufacturer is using the same

technology as UNICEF in the re-designed products too, he would not have to

undergo the same approval processes or face the risk of non-approval by

authorities.

iDE’s Role

In the case of option A, iDE can perform the following activities: (1) rural marketing to

generate demand for the UNICEF and re-designed products among rural and urban

households; (2) supply chain development to establish a distribution network, particularly for

last-mile customers, to meet the newly generated demand; (3) market assessment to help

develop the marketing strategies and to evaluate the performance of the UNICEF products.

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In the case of option B & C, iDE can in addition to the activities undertaken in option A assist

with (4) product development, using human-centered design, using the results from the

market assessment.

More details about the activities can be found in section 2.

Section III: The Proposed Approach

Case C was chosen as the most likely scenario, given that currently, the manufacturers are

willing to sell UNICEF products and have developed a new ceramic filter using the UNICEF

technology but with a different design and price point.

Rationale

This project is an opportunity for iDE to promote low-cost ceramic water filters in the country,

a technology that has been widely successful in Cambodia but remains relatively absent from

the Vietnam markets. The project involves the manufacturer selling two types of products –

the UNICEF filter and the re-designed filter. UNICEF has provided the manufacturer with its

filter technology for free, and will support the manufacturer by organizing high-level

promotional events, buying the products for distribution to poor people, and introducing him

to potential distributors for its product. The manufacturer has developed a new ceramic filter

using the UNICEF technology but with a different design and price point. This redesigned

product is priced by the manufacturer at 1.2 million VND, and is not particularly catered to

the low-income consumers. While the UNICEF product enjoys a high brand value, it is priced

at only 500k VND, which implies that the manufacturer will only be able to make profits from

high sales volume for this product.

Using its expertise in market building, iDE can play a critical role in helping the manufacturer

reach the low-income households. Additionally, with its experience in market assessment and

product design, iDE can help the manufacturer design a product that is better suited to its

consumers' needs.

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Project Goal

The goal of this project is to extend access to safe and affordable drinking water to poor, rural

and ethnic minority households in Vietnam.

Project Objectives

The overall objective of the project is to develop a market for affordable ceramic water filters

that can be afforded by households who lack access to safe drinking water. To facilitate this,

the project will

● Strengthen the market demand for low-cost ceramic water filters

● Spread awareness and education on the importance of safe drinking water

● Support the distribution of ceramic filters across Vietnam, with a focus on minority

communities, rural, and poor households.

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Project Geography

From studies done by the National Centre for Biotechnology Information (NCBI)23, and after discussions with Dr. Danielle (Water Expert), it is suggested that iDE intervene in the South of Vietnam. The main areas of interest would be the Mekong River Delta, South East and Central Highlands regions. The reasons are twofold:

• These households are underserved populations who lack access to even improved water sources.

• From a product functionality perspective, North Vietnam may pose challenges due to clogging.

Target Population

The project will target hard to reach, rural households in Vietnam in the low-income

category. These are primarily households who cannot afford reverse-osmosis filters.

Theory Of Change

Project activities

Given iDE’s past experience and expertise, the following project activities can be undertaken

for this project-

23 https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4780076/

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Market Assessment

(a) Pre-sales

• Consumer understanding research. iDE will carry out a comprehensive consumer

understanding research to develop a commercial quality marketing campaign. The

purpose of the research is to collect insights regarding perception, motivational

factors, and local beliefs. Developing a systematic consumer understanding research

study is critical to develop a marketing campaign that appeals to the emotional

benefits of purchasers. This will be conducted to understand the consumers’ needs,

suitability of the products to the local conditions, potential adoption of the

technology, and its impacts. This may be undertaken as a replication of the field study

using the SAIS Field Trip Methodology (2018) submitted to iDE.

• Market segmentation and sizing. iDE will study market segmentation and sizing, by

identifying potential consumers for the different products sold by the manufacturer,

based on geographic, demographic, psychographic, and behavioral characteristics of

the market. This will in turn inform the marketing and branding strategies.

(b) Post-sales

• Consumer response to products. iDE will evaluate consumer response to the two

products that will introduced to the market. Based on this, the other project activities

can be revised and undertaken in the next phase.

Marketing and promotion

The role of rural marketing is to introduce consumers to low-cost ceramic filters, to encourage

families to change their behavior to adopt the filters, and thereby stimulate consumer

demand for the technology. iDE will conduct marketing activities together with its local

partners in project areas. iDE will employ both “push strategies”- activities directly targeting

consumers to create their demand for ceramic water filters, and “pull strategies” – activities

directly targeting the manufacturers and retailers of the ceramic water filters so that they are

aware of the business potential, and effective ways to promote and market the products to

the consumers.

Key marketing activities to be implemented include:

• Marketing campaign development. Using information from the consumer

understanding research, iDE will design appropriate marketing campaign taking into

consideration demographic and psychographic characteristics, existing filtration

practices, filter usage patterns, ethnicity, and ability to pay. In addition, the

communication campaign to convey the benefits of the ceramic water filter will be

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pre-tested and validated through focus group interviews to ensure that the messages

are clearly understood and conveyed effectively. iDE will also develop materials such

as promotional videos and leaflets, as well as undertaking a range of marketing

activities with high visibility in rural communities such as demonstrations, meetings,

sponsorship of local events, and other activities. Local partners such as the Women’s

Unions will be engaged to effectively reach the target population through these

activities.

• Identification of early-adopters for promotion of ceramic water filters. Early-

adopters are expected to adopt the ceramic water filters much earlier than the others.

They are more knowledgeable relative to others, open to new things and less averse

to risk. Using the information from consumer understanding research and market

segmentation, the project will identify these early-adopters to target first in marketing

campaigns.

• Promotion of the products through demonstrations (demos). Through prior

experience, iDE has found that demos and hands-on experience are the best ways to

promote products among low-income households. Together with local partners like

the Women’s Unions and early adopters, iDE will conduct demos of the water filter.

• iDE will also conduct various promotion activities through the local partners’

network. The purposes of the activities are to raise awareness about ceramic water

filters and encourage consumers to adopt them. Activities to be implemented include

meetings, visits to demo plots, organization of events, short-term sales promotion

campaigns, distribution of promotion materials, mobile demonstration of the filters

in public places, etc. Other mass marketing activities (dissemination of information on

loud-speaking systems, distribution of promotion materials) would also be used for

awareness-building in the local areas. These promotional activities will be done in

partnership with the Women’s Union. While marketing activities targeting the poor

will be in principle similar to those targeting the non-poor and early adopters, one-to-

one interactive promotion methods will be employed to convince poorer households

to invest in the products.

Distribution/ supply chain development

From our field-based research, it was revealed that the consumers prefer local partners like

the Women’s Union to be the last-mile suppliers of products. This is not only because it may

be more convenient for the consumers to access the products, but also because they can

trust the product’s quality if it is supplied through a government channel. Hence, iDE’s role

could be to connect the consumers to reliable last mile suppliers like the Women’s Unions

and other local partners.

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Supply chain development activities will include:

• Identification of last-mile suppliers. This activity will be carried out using findings

from the survey mentioned above. The recruitment of local partners will be an on-

going process. It is expected that IDE will work with the current manufacturer in south

Vietnam to identify the others actors in the supply chain, and hence work with them

to connect them to last-mile suppliers according to the identified consumer base and

growing demand.

• Capacity building for supply chain members. Based on the needs identified, the

project will also provide necessary technical training to the last-mile suppliers such as

on sales and after-sales services so that they can in turn provide advice to their clients.

Where necessary, training on business knowledge and skills will also be provided.

Product Development

iDE can help the manufacturer re-design its products based on the results of the market

assessment undertaken. The new product can be designed specifically to cater to the needs

of the people and to address their concerns with the filters being sold to them, using human-

centered design (HCD) methods. HCD is a systematic method for acquiring a deep

understanding of customers, their environments, and their routines in order to create

innovative solutions to the problems that they face.24 The iDE team can use HCD principles to

gather feedback about what people desire and then design an aspirational yet affordable

water filter that fills a market gap.

Monitoring and Evaluation

The success of the proposed project will be evaluated against the set objectives and based

on the monitoring of the specific outputs and outcomes leading to the objectives. At the

beginning of the project, an Monitoring and Evaluation (M&E) framework will be developed

that details the project indicators, M&E methods and tools, data analysis and implementation

plan. IDE staff and the local partner will continuously monitor and collect data on the project’s

progress vis-à-vis these objectives and outputs/outcomes. Based on proposed outputs,

detailed indicators and data requirements will be revised. iDE will train the field staff and

provide the relevant M&E materials to them.

• Monitoring: For monitoring, iDE field staff and the local partner will conduct frequent,

often bi-weekly monitoring activities. These activities include observation visits,

interviews and focus group discussions. The monitoring activities will be aimed at the

consumers (buyers of the filters), the last-mile distributors, and the manufacturer to

24 https://www.ideglobal.org/story/human-centered-design

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gather information from both, the demand and the supply sides. Some of the demand

side indicators that will be measured will include consumers’ usage of the filter,

feedback on the design, functionality and price of the filter, and any suggested

changes to the design they want to see. From the supply side, the distributors and the

manufacturer will be asked questions on topics like the sales volume, profit margins,

and any feedback they receive from the consumers.

• Evaluation: For evaluating the overall impacts of the project, iDE staff will carry out a

baseline and an end-line evaluation, through observation visits, interviews and focus

group discussions. The evaluation study will be a quasi-experimental study with a

before-and-after analysis approach. The baseline data collection will be done during

the project planning phase, and the end-line data collection will be done 1 year after

the launch of the filters in the market. The project evaluation seeks to assess if the

outputs and outcomes of the project are achieved or are close to being achieved.

These include specific indicators on the success of the business model, but also

indicators on health, economic and social impacts. The latter will be difficult to

measure in this short time-frame, but some marginal improvement may be measured.

Other evaluation questions will include asking the consumers about their preference

for the product, and asking the manufacturer about the overall success of his business.

The results of the M&E will be disseminated to the manufacturers and the local partners, so

that they can better understand the successes and failures of the business model. The results

will also be used to recommend changes in their business model and activities, or in the

product design itself.

Budget The proposed project includes a budget associated with iDE’s activities. Costs can be

broken down into four main categories. For a flexible budget please refer to the Flexible

Budget 2018 document.

1. Additional Field Studies & Market Assessment

a. Additional field work will be needed to evaluate the Southern market,

consumer interest in original and newly designed filter, and study consumer

use of the product

b. It is assumed that three additional field studies will need to be conducted

within the first year.

2. Product Design and Evaluation

a. IDE will also need to conduct additional research into HCD and consumer

design demands.

b. It is assumed that this can be done with one research study in the first year.

3. Marketing

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a. Marketing is a critical role of IDE in this proposed plan. For marketing to be

effective it is assumed that marketing campaigns must be a constant activity

b. Promotional activities, community visits, and relationship development are

also key functions and assumed to take significant IDE labor commitments.

4. Distribution

a. IDE staff will have to spend time and visit with provincial partners to establish

sales networks. This is also assumed to take significant time and travel for

staff.

5. General

a. The annual operational growth of the manufacturer is assumed to be 15%

and thus IDE’s resource commitment to the project is also assumed to grow

at 15% annually.

Outputs and Outcomes

Based on the activities that will be undertaken in this business model, the outputs to be

measured are-

Project Activities Project Outputs

Market Assessment ● Successfully understand the preferences of the

consumers towards ceramic water filters

● Successfully analyze the data collected to design a

marketing and distribution strategy that caters to the

needs of the consumers

Marketing ● Successfully reaching consumers with marketing and

promotional activities

● Sale of water filters to early adopters

● Training and capacity building of early adopters and the

local partners for marketing and promotion

Distribution and

Supply Chain

Development

● Successfully building a last-mile distribution channel

● Sale of xxx units of the low-cost water filters in the low-

income market segment through last-mile distribution

Product Development ● Successfully understand the preferences of the

consumers towards the sold ceramic water filters

● Successfully analyze the data collected to design a product

that caters to the needs of the consumers

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Project Outcomes

The overall long-term outcomes that this project seeks to achieve are building a market for

low-cost ceramic water filters in Vietnam, thereby helping expand access to safe drinking

water in the country.

Risks and Mitigation Strategies

Risks Mitigation Strategies

Market Demand Low market demand for

ceramic water filters in

regions, other than

Tuyen Quang Province

1) Replicate SAIS Research Guide to assess market size

2) Redesign product using HCD 3) Advise manufacturers to reduce price of

redesigned product by locally sourcing material and using iDEs last mile distribution services in order to cut down costs

Project Activity 1:

Marketing

Marketing methods fail to

capture trust and interest

of consumers

Identify early adopters, and utilize their testimony

to spread the word. This can be done by conducting

demonstrations where consumers/early adopters

can speak about the product experience and

demonstrate to others on how it functions.

Marketing material

unable to convince

consumers to buy water

filter instead of boiling

Multi-channel marketing methods that target a

range of consumers and provide evidence on the

effectiveness of the product. Stress on time-saved

and convenience factor

Project Activity 2:

Supply Chain

Development

Women's network

unable to distribute

products

Provide a 10-15% commission for the

distribution of products.

Retailers do not extend

service to rural areas

Establish an order based approach, where

products are distributed once every two weeks

to those who have pre-paid/ placed an order.

iDE's role would not be to distribute, but to

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establish the network and approach.

Retailers do not

promote low-cost filters

in their shops

Establish the main channel of distribution

through door-to-door sales and reduce

dependence on retail network, as was in the

case with Hydrologic in Cambodia.

Project Activity 3:

Market Research

Opinions of very poor

households not

considered

Market research should be conducted among

very poor households who may form potential

customers

Project Activity 4:

Product

Development

Product design does not

attract consumers

Conduct quick survey to identify problems and

needs, and use HCD to help manufacturers

redesign the product - instruction labels on

product, coloured plastic, sophisticated design

, height of product, stand for mounting etc.

After-Sales Process Low customer turnover

a result of poor

customer service and

unknown retailers

Currently, the manufacturers have no plan in

place for after-sales services. Given that there

will be multiple distribution channels i.e.

retailers and WU, a customer service channel

needs to be set up immediately where

consumers can report damaged products,

replace spare-parts or clarify questions on

functionality.

Low customer retention Once customer buy the product, robust

customer engagement is required to dispel

misunderstandings, and build trust for the

product. A hotline can be set up for the initial

months to ensure retention and generate more

demand.

Retailers do not

prioritize complaints by

consumers from ethnic

minority or poor

For poor households, WU or a local village head

can act as a liaison between the retailer and the

customer, in order to make the process

convenient and efficient.

22

households due to cost-

ineffectiveness or small

profits.

The high rate of

breakage of the filters

without the availability

of replacement parts or

the access and

awareness and

distribution points may

severely limit the

sustainability of

intervention.

(UNICEF)25

Ensure that the customer service is established

and consumers are well aware of whom to and

how to reach out to the manufacturers in case

of breakage of pots.

Licensing and

Approvals

Manufacture is not

permitted to use

UNICEF logo in new

product

IDE ensured the product technology is the

same and helps promote both UNICEF and new

product by marketing them as having the same

benefits, design being the only difference

Product Details:

Design, Price and

Functionality

The re-designed

product may not sell

because of product

design

Effective market research, branding and

marketing strategies by iDE targeted towards

the relevant market segment.

The product may not

sell because of the high

cost.

1) Effective branding and marketing strategies

that highlight the better design, and are

targeted towards the relevant consumer base

2) Make the low-cost filter marketable to price

sensitive customers

25 https://www.wsp.org/sites/wsp.org/files/publications/926200724252_eap_cambodia_filter.pdf

23

Product functionality

might be affected due

to clogging, especially in

areas high on calcium

and magnesium

1)Spread awareness about pre-filtration of

water through these promotional activities, so

that the filter functionality remains

unquestioned

2) Establish customer redressal mechanism in

case consumers want advice on pre-filtering

3) Filters and receptacles must be cleaned

regularly, especially after filtering turbid

water26

Business Model The margins are too low

for the manufacturer to

distribute the product

to more remote

locations.

1) Through field research iDE can help the

manufacturer to identify if and where there

is market demand for water filters.

2) iDE can provide the necessary support to

sell products in more remote locations

Misalignment of

Interests

Private manufacturers

divert from the

commitment of selling

water filters to poor

households.

1) iDE informs UNICEF of mission drift.

2) iDE provides conditional support to

manufacturers, based on the fact that low-

income consumers are being served.

Assumptions

● Even though UNICEF does not allow the manufacturer to use its logo on the different

products, it allows it to use its technology: The only design-related differences

between the UNICEF and re-designed products are the outer covering, which has been

imported from China for the latter. However, technology-wise, the two types of

products are the same, i.e., the re-designed product does not have better functions,

but a better design.

26 https://www.cdc.gov/safewater/ceramic-filtration.html

24

● The manufacturer has the relevant state-related approvals and certifications to sell

the products. Through our interviews with key stakeholders, we are aware that the

UNICEF product had to undergo certification processes to get approval by state

authorities before it could launch its filtration technology into the market. Thus, we

assume that since the manufacturer is using the same technology as UNICEF in the re-

designed products too, he won’t have to undergo the same approval processes or face

the risk of non-approval by authorities.

● The manufacturer is willing to work closely together with iDE to develop a marketing

and supply chain strategy, and use human-centered design to develop new products.

● iDE can add value to the activities undertaken by the manufacturer and has the

capability to execute the activities described under the activity section.

Information gaps

● Relationship between manufacturers and UNICEF: Details about the contractual

relationship between the manufacturer and UNICEF are still not fully disclosed. The

manufacturers receive support from UNICEF to disseminate the low-cost UNICEF

product (i) through marketing activities such as promotional events organized jointly

with governmental organizations or by introducing the manufacturer on the national

television channel, (ii) by connecting manufacturer with potential distributors, (iii) by

buying products and giving them to the poor. According to the manufacturer, in the

case the UNICEF product is not accepted by the market, the manufacturer has the

right to stop selling that product and design a new one. It is, however, uncertain how

much freedom the manufacturer will have in redesigning a new product or selling the

product at a different price.

● Intention of the manufacturer: It is hard to assess the intention of the manufacturer

-- whether the manufacturer will work closely with UNICEF and focus on low-income

customers in rural areas, or focus more on better-off customers in the urban areas

with the higher-priced re-designed product.

● Market demand for the UNICEF product: No market research has been done with

regard to market demand for the UNICEF product.

● Manufacturer’s willingness to work with iDE: As of now, uncertainties remain about

the manufacturer’s willingness to work with iDE and in what capacity iDE can add the

most value to the manufacturer.

● Current supply chain: Information gaps persist about how the current supply-chain

looks like. According to the manufacturer, they are currently selling their products to

distributors and retailers. No customer service process has been set up. It is unclear

which regions or areas the manufacturer is going to enter.

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